China’s moves to tackle swine fever are ‘ineffective,’
and it may cause inflation to spike above target

·China’s efforts to halt the spread of African swine fever among
its pig population are “ineffective,” according to research firm Capital
Economics.

·The current pork shortage will push up pork prices, causing
inflation in 2020 to rise above government targets, economists say.

·A recent outbreak of swine fever has hit the world’s largest pork
producer hard. As a result, pork prices in China have soared.

Stella Soon, CNBC

Sep 15 2019

China’s efforts to halt the spread of African swine fever
among its pig population are “ineffective,” according to research firm Capital
Economics. That’s set to cause its inflation to shoot up above its target for
the first time in nearly a decade next year, it said.

The Chinese government’s measures to contain the fallout
from the disease will only have a “marginal impact,” its Senior China Economist
Julian Evans-Pritchard wrote in a Thursday note.

The swine fever outbreak, detected last year, has hit the
world’s largest pork producer hard, in a country where the meat is also a
staple. In July, analysts at Dutch bank Rabobank predicted that China’s pig
supply was down by about 40% — from a year ago —and estimated that China’s pig
herd could shrink by half by end 2019, as compared to last year.

That shortage has caused pork prices to soar. In August,
prices of pork were up 46.7% year-on-year, according to China’s National Bureau
of Statistics.

“Intervention by China’s government to halt the spread of
African Swine Fever (ASF) and mitigate its impact on pork prices is proving
ineffective,” Evans-Pritchard wrote in the note. “Inflation will next year rise
above the government’s target for the first time in nearly a decade as a
result.”

Evans-Pritchard predicted that, by early 2020, prices
could increase over 80% as compared to the same period last year.

That will weigh on China’s consumer price index.
Inflation could average 3.5% and peak over 4% next year, he estimated. That’s
over the 3.0% annual average inflation target set by China’s central bank.

In March, China’s consumer prices rose 2.3% in August due
to rising food prices — a six-month high.

China said last week it would issue subsidies of up to
five million yuan ($700,000) — in the latest measure to boost pork production.

Those subsidies would go towards the construction of
large-scale pig farms. Authorities also said they would support large farms
that needed to be relocated for environmental reasons, and improve and expand
waste treatment facilities.

“We should ensure pork supply by all means ... and
strictly rein in market speculation, actively boost production of alternative
meat products and increase frozen pork reserves,” China’s vice-premier Hu
Chunhua said in late August, according to state-owned Xinhua News Agency.

But, in the short run, China’s efforts to control the
swine fever outbreak won’t help much, noted Capital Economics, though they will
boost production capacity in the medium term...